In a startling revelation, Bryan Pellegrino, the co-founder and CEO of LayerZero, has publicly accused Kyle Davies, co-founder of the now-collapsed Three Arrows Capital (3AC), of attempting to sway his company into transferring its entire treasury to 3AC shortly before its liquidation.
Pellegrino made these claims in a response to Davies’ comments on a podcast, via an X post.
According to Pellegrino, Davies sought to secure LayerZero’s treasury by “promising better rates than other borrowers as a last-gasp effort,” showcasing a desperate move ahead of 3AC’s financial turmoil.
The accusations surfaced after Davies, on the Unchained YouTube interview podcast, refrained from issuing an apology to investors for 3AC’s downfall, sparking controversy.
Pellegrino’s assertions shed light on 3AC’s strategy of soliciting loans from various entities despite its impending insolvency, a tactic Pellegrino criticized for exploiting personal and professional relationships, including those with prominent figures like BitMex co-founder Arthur Hayes.
The crypto community and observers have rallied behind Pellegrino, condemning Davies’ conduct and the broader implications of 3AC’s practices, which relied on deceitful loan acquisition.
The backlash also saw X users, including @basedkarbon, criticizing Davies’ lack of tact in handling the situation.
Three Arrows Capital, founded by Davies and Su Zhu in 2012, managed an impressive $10 billion in assets by 2021.
However, the firm’s fortunes plummeted to $3 billion by April 2022, primarily due to the catastrophic fallout from the TerraUSD stablecoin crash, triggering a widespread crypto market crash.
The firm’s decline culminated in a Chapter 15 bankruptcy filing on July 1, 2022, as it sought to shield its assets from creditors amidst a dire financial crisis.
The collapse of 3AC had a profound impact, ensnaring numerous investors and companies in its wake. The bankruptcy proceedings revealed debts amounting to $3.5 billion owed to 27 entities, including a staggering $2.3 billion to Genesis Global Trading.
The fallout also severely affected Blockchain.com and Voyager Digital, with the latter filing for Chapter 11 bankruptcy after being unable to recover approximately $670 million loaned to 3AC.
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